Brookings Economics: 'Watch What We Say, Not What We Do'

That shopworn businessman's jibe that "making money is too important a responsibility to be left to economists" is gaining new currency these days at the Brookings Institution.

For almost 20 years, the respected Massachusetts Avenue think-tank has been the nation's most frequently consulted fount of advice on leading economic policy issues.

Many of the major breakthroughs in economic thinking in recent years have emanated from its dowdy halls. Democratic and Republican administrations alike reverentailly have knocked on its doors for help.

As so often happens when fate overwhelms wisdom in Western civilization, however, the institution's famed intellectual prowess has not done Brookings very much good in protecting its own pocketbook in the past few years.

Offficials report the institution's once-posh investment fund has shrunk from a high of $50.1 million in 1972 to a relatively austere $33.4 million in 1978.

Last year, it stood at $35.2 million, down 29.7 percent from seven years ago.

The reason for this embarrassing setback is not any one failure of Brookings' economic advice -- although that, too, has yielded mixed results lately.

Rather, it's that the institutation -- along with thousands of other investors -- took a bath in the 1973-74 stock market plunge, which neither Brookings nor many other forecasters quite predicted.

Since the initial plunge in 1973-74, the Brookings endowment has been holding its own. But its trustees have been scurrying to diversify and avert another crunch.

And how did the nation's leading economic advice-giver get caught in such a bind?

"We were as much into growth stocks as everyone else," confesses Bruce K. MacLaury, the former Minneapolis Federal Reserve Bank president who now serves as Brookings' chief executive officer. "We fell victim to the decline." Nevertheless, MacLaury concedes that when you're The Brookings Institution and you lose your shirt in the market it's a little more embarrassing than when, say, the fella down the block sees his stock go down a point or two.